- The GBP/USD goes up while the US dollar is under pressure in the midst of growing concerns about the economic repercussions of US tariffs.
- The president of the Federal Reserve, Jerome Powell, warned that a slow economy combined with persistent inflation could raise the risk of stagning.
- The Treasury Chancellor of the United Kingdom, Rachel Reeves, will meet with US officials next week to advance the business agreement.
The GBP/USD continues its bullish impulse since April 8, quoting about 1,3280 during the Asian session on Friday. The torque is driven by a weakening of the US dollar (USD), as concerns about the economic impact of tariffs in the United States grow. While market participants monitor developments in US commercial conversations, commercial activity is expected to remain light due to the Good Friday holiday.
The USD found some support after the hard line comments of the president of the Federal Reserve, Jerome Powell, who warned that a slow economy along with persistent inflation could challenge the double mandate of the Fed and increase the risks of stagflation. According to the CME Fedwatch tool, the operators are valuing around 86 basic points of rates cuts by the end of 2025, with the first expected in July.
In the Data Front, the US Labor Department reported that the initial unemployment subsidy applications fell to 215,000 for the week that ended on April 12, exceeding expectations and lowering a revised 224,000 the previous week. However, continued requests increased by 41,000 to 1,885 million for the week that ended on April 5.
The Treasury Chancellor of the United Kingdom, Rachel Reeves, plans to meet with US officials next week to advance discussions about the commercial agreement. The Telegraph reports that the White House believes that an agreement could be terminated “within three weeks.”
The economic data of the United Kingdom have shown signs of resilience, with strong salary growth and improvements in GDP figures. However, the decrease in inflation is feeding the expectations of rate cuts by the Bank of England (BOE). The March CPI slowed to 2.6% year -on -year, below forecasts, while monthly inflation fell to 0.3%. The underlying services inflation, a key indicator of the BOE, fell to 4.7%.
LIBRA ESTERLINA FAQS
The sterling pound (GBP) is the oldest currency in the world (886 AD) and the official currency of the United Kingdom. It is the fourth most commercialized currency exchange unit (FX) in the world, representing 12% of all transactions, with an average of $ 630 billion a day, according to data from 2022. Its key commercial peers are GBP/USD, which represents 11% of FX, GBP/JPY (3%) and EUR/GBP (2%). The sterling pound is issued by the Bank of England (BOE).
The most important factor that influences the value of sterling pound is the monetary policy decided by the Bank of England. The Bank of England bases its decisions itself has achieved its main objective of “price stability”: a constant inflation rate of around 2%. Its main tool to achieve this is the adjustment of interest rates. When inflation is too high, the Bank of England will try to control it by raising interest rates, which makes access to credit for people and companies more expensive. This is generally positive for sterling pound, since higher interest rates make the United Kingdom a more attractive place for global investors to invest their money. When inflation falls too much it is a sign that economic growth is slowing down. In this scenario, the Bank of England will consider lowering interest rates to reduce credit, so that companies will borrow more to invest in projects that generate growth.
Published data measure the health of the economy and can affect the value of sterling pound. Indicators such as GDP, manufacturing and services PMI and employment can influence the direction of the sterling pound.
Another important fact that is published and affects the pound sterling is the commercial balance. This indicator measures the difference between what a country earns with its exports and what you spend on imports during a given period. If a country produces highly demanded export products, its currency will benefit exclusively from the additional demand created by foreign buyers seeking to buy those goods. Therefore, a positive net trade balance strengthens a currency and vice versa in the case of a negative balance
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
